Valmet, the Finnish forest industry and energy technology group, has reported a weaker-than-expected set of second-quarter results, revealing a sharp drop in new orders and compressed margins. The company posted adjusted earnings before interest, taxes, and amortisation (EBITA) of €112 million for the three months to June, falling short of the consensus estimate of €128 million. Orders received declined 14% year-on-year to €1.1 billion, reflecting continued caution among pulp and paper producers amid uncertain global demand.
In a separate announcement, Valmet's board confirmed it has launched a strategic review of the group's structure, with a view to potentially splitting the company into two independent listed entities. The review will assess the separation of Valmet's Automation Systems business from its Services and Process Technologies divisions. The board said the move is intended to unlock shareholder value and sharpen strategic focus, though no final decision has been taken. A further update is expected later this year.
Shares in Valmet fell as much as 8.7% in Helsinki trading on the day of the announcement, closing at €24.15, their lowest level in 12 months. The decline weighed on the broader European industrial sector, with the Stoxx Europe 600 Industrial Goods & Services index slipping 0.6%. For UK investors with exposure to Nordic equities through exchange-traded funds or pension funds, the slide underscores the risks tied to cyclical capital goods companies.
Analysts at Nordea described the results as 'disappointing', noting that the order intake weakness was broad-based across all regions. 'The strategic review adds a layer of uncertainty in the near term, but a demerger could ultimately crystallise value if properly executed,' they wrote in a note. The company's Automation division has been a relative bright spot, with higher margins and stronger growth, which could make it an attractive standalone entity.
Valmet employs around 17,000 people globally and competes with the likes of Andritz and Voith in supplying machinery and automation to the pulp, paper, and energy industries. The group's UK operations are modest, but the company's technology is used in several British paper mills. A split would mark a major structural shift for the 70-year-old Finnish firm and could prompt rivals to reassess their own portfolios.